Yesterday's trading session began on a rather gloomy note. The market struggled to digest reports of a likely action by the US Department of Justice against Federal Reserve Chair Jerome Powell, relating to developments at the central bank's headquarters. This was widely seen as a fresh escalation in the ongoing tug-of-war between the Fed and the White House. The former seeks to conduct monetary policy independently, while the latter wants it to follow executive directives. By the end of the day, most Western indices had edged back towards equilibrium, with Wall Street even closing slightly higher. The campaign to undermine the Fed's independence has drawn criticism even from within the Republican camp, and the market largely believes the case against Powell will amount to very little.

The US central bank and interest rate debates will remain centre stage today, with the release of December inflation figures early this afternoon. As a reminder, the dual mandate of US monetary policy is to ensure a healthy labour market and contained price rises. While the jobs market in the US is under pressure, it has not buckled, and inflation remains somewhat too high. The White House sees no obstacle to rate cuts. The Fed, however, does. This afternoon's data will therefore be crucial in tipping the balance either way. That said, the most likely scenario is a non-event. December inflation is expected to come in at 2.7%, a slight slowdown from November's 2.8%. Core inflation is also forecast at 2.7%, up marginally from 2.6%. If economists are correct, this would suggest that inflation remains somewhat elevated but not excessively so, supporting the case for holding interest rates steady in the near term. Such an outcome would help maintain a relatively benign environment for equity markets.

The other key event today is the start of the Q4 2025 earnings season, with American banking heavyweights JPMorgan Chase and Bank of New York reporting. Analysts are broadly confident about the past quarter's figures, which are expected to be very strong. For instance, consensus estimates put JPMorgan Chase's pre-tax profit at $73.8 billion, roughly equivalent to the annual GDP of Azerbaijan. However, investors will be keenly watching the outlook for 2026. Banks are well positioned to gauge the pulse of the economy. At this stage, markets expect robust forward guidance, despite Donald Trump casting a shadow yesterday by urging financial institutions to cap credit card rates at 10% for a year to support household purchasing power.

In short, as ChatGPT might put it, US inflation data and the first wave of corporate earnings are front and centre today, set against a backdrop of geopolitical tensions that have injected volatility and pushed up gold prices (flight to safety) and oil prices (supply concerns linked to unrest in Venezuela and Iran). Meanwhile, Japan has generated its own drama amid rumours of early elections. New Prime Minister Sanae Takaichi is reportedly planning to dissolve the lower house in ten days to consolidate her position and gain greater leeway to implement her stimulus plan. Unlike some Western leaders who shall remain nameless, she enjoys an approval rating near 70%, giving her the confidence to take the risk. Tokyo's stock market roared back with a 3% gain following a public holiday: the prospect of Japan's massive debt load increasing matters little compared to the hope of a fresh injection of liquidity into the economy.

Elsewhere in Asia-Pacific, market performance is mixed. Australia and South Korea continue to climb. India and mainland China have edged down slightly. Hong Kong and Taiwan are both up 0.6%. European futures are hovering around neutral.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$4,581.41
  • Crude Oil (BRENT): US$64.34
  • United States 10 years: 4.19%
  • BITCOIN: US$91,969.2

In corporate news:

  • Smith & Nephew acquires Integrity Orthopaedics for up to $450 million, enhancing its portfolio with the Tendon Seam rotator cuff repair system.
  • JD Sports launches AI platforms in the U.S. for enhanced product search and purchasing, collaborating with commercetools and Stripe.
  • Novo Nordisk anticipates its oral GLP-1 obesity drug will secure about a third of the market by 2030, driven by strong growth prospects.
  • UniCredit is in talks to acquire Delfin's 17% stake in Monte dei Paschi and raises €1 billion through Tier 1 perpetual notes.
  • Symrise AG plans to sell its terpenes business, announces a €400 million share buyback, and records €295 million in impairments affecting Q4 2025 earnings.
  • Brunello Cucinelli reports an 11.5% increase in annual revenue to EUR 1.4 billion, driven by strong sales in the US and Asia.
  • Sika AG reports a 4.8% drop in full-year sales to CHF 11.2 billion for 2025, missing expectations due to a weakened construction market in China.
  • Acciaierie d'Italia sues ArcelorMittal for €7 billion in damages, alleging mismanagement of its ILVA steelworks.
  • Meta Platforms expands global data center partnerships and AI infrastructure with Meta Compute, while planning workforce reductions and facing an antitrust investigation.
  • Citigroup declares a $0.60 dividend per share and plans to cut approximately 1,000 jobs as part of a cost-trimming strategy.
  • Amgen announces positive Phase 2 trial results for MariTide, showing robust reductions in blood sugar and weight.
  • Nvidia eliminates the upfront payment requirement for its H200 chips amid regulatory uncertainty.
  • Ørsted granted an injunction to resume construction of its Revolution Wind offshore wind project in Rhode Island.
  • Invesco Ltd reports assets under management (AUM) totaling $2,169.9 billion as of December 31, 2025.

See more news from UK listed companies here

Analyst Recommendations:

  • Dowlais Group Plc: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 81 to GBX 85.
  • Anglo American Plc: Investec maintains its hold recommendation and raises the target price from ZAR 70,000 to ZAR 77,500.
  • Glencore Plc: Investec maintains its buy recommendation and raises the target price from ZAR 10,500 to ZAR 12,000.
  • Pan African Resources Plc: Investec maintains its buy recommendation and raises the target price from ZAR 2500 to ZAR 3200.
  • Baltic Classifieds Group Plc: Barclays maintains its overweight recommendation and reduces the target price from GBP 2.90 to GBP 2.70.
  • Aston Martin Lagonda Global Holdings Plc: HSBC maintains its hold recommendation and raises the target price from GBP 0.56 to GBP 0.58.
  • Greatland Gold: Canaccord Genuity maintains its buy recommendation and raises the target price from AUD 11.55 to AUD 12.50.
  • Greggs Plc: JP Morgan maintains its overweight recommendation and reduces the target price from GBP 21.10 to GBP 20.60.
  • Entain Plc: Jefferies maintains its buy recommendation and reduces the target price from GBX 1200 to GBX 1000.
  • Airtel Africa Plc: HSBC downgrades to hold from buy and raises the target price from GBP 3.30 to GBP 4.
  • Carnival Corporation & Plc: UBS maintains its buy recommendation and raises the target price from GBX 2600 to GBX 2900.
  • Vodafone Group Plc: UBS maintains its sell recommendation and raises the target price from GBX 80 to GBX 82.
  • Fevertree Drinks Plc: Goldman Sachs maintains its neutral recommendation and raises the target price from GBX 850 to GBX 875.
  • J Sainsbury Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 400 to GBX 370.